Expedia Group CEO Mark Okerstrom and CFO Alan Pickerill have resigned abruptly from the Seattle-based online travel giant, and chairman Barry Diller is stepping in to run the company, citing a strategy disagreement between the top executives and the board over efforts to unify the company’s operations.
The surprise shakeup, announced Wednesday morning, comes a little more than two years after Okerstrom was named to the role, succeeding Dara Khosrowshahi after he left to become Uber’s top executive. It also comes just two months after the company made its long-awaited headquarters move from downtown Bellevue, Wash., to a high-profile Seattle waterfront site.
In a message to employees, Diller called it “an unfortunate and difficult situation,” saying he and board vice chairman Peter Kern will oversee the company’s executive team and day-to-day operations.
He said the board “disagreed on strategy” with Okerstrom and Pickerill over the company’s “ambitious reorganization” that aimed to unify the company’s brands and technology.
“This reorganization, while sound in concept, resulted in a material loss of focus on our current operations, leading to disappointing third quarter results and a lackluster near-term outlook,” he wrote. “The Board disagreed with that outlook, as well as the departing leadership’s vision for growth, strongly believing the Company can accelerate growth in 2020. That divergence necessitated a change in management.”
The reorganization was meant to help Expedia’s brands take better advantage of the larger company’s scale. It established three new organizational groups overseen by current e-commerce president Tucker Moodey; Vrbo president John Kim; and president of lodging partner services Cyril Ranque.
The abrupt shakeup in management is the latest in a series of executive changes over the last few months. Aman Bhutani — the Brand Expedia Group president who oversaw the company’s online travel businesses including Travelocity, Orbitz and the flagship Expedia brand — left in July.
Expedia stock is up 7 percent this morning following the latest executive shakeup. However, RBC Capital analyst Mark Mahaney wrote that he’s less optimistic about Expedia “given what now looks like higher execution risk due to the uncertain management team.”
But the stock is down more than 20 percent since early November when the company reported the “disappointing third quarter results,” that Diller mentioned. Expedia’s revenue rose 9 percent to $3.56 billion in the third quarter. But revenue came in below expectations, as did profits, which declined 7 percent over the prior year.
Diller, the former Paramount Pictures chairman, started the Fox television network and USA Broadcasting. He oversees a wide range of online brands as chairman of the IAC media and Internet company. Diller made his first investment in Expedia in 2001 and remains its chairman.
In a 2018 Wall Street Journal feature, Okerstrom said Diller provided him with “lots of real time feedback” and was “quick to point out if I’m dancing around the issue or using fluffy language.”
He wields immense influence at Expedia. The long-time chairman controls 28.5 percent of the shareholder voting power, per Expedia SEC filings. Under a new governance setup, Diller has the option to purchase shares that would increase his control to roughly 48 percent of all voting power.
Expedia didn’t waste much time changing the company’s executive leadership page on its website, removing Okerstrom and Pickerill. Okerstrom is still listed as a member of the board, though today’s announcement also noted that the long-time Expedia executive was stepping down from the board.
Okerstrom did not play an active role in Expedia Group’s virtual shareholder meeting, held Tuesday. It’s unclear if he was present, based on the company’s recording of the meeting, which lasted a little more than 5 minutes. The recording indicates that Okerstrom was re-elected to the board via shareholder vote, suggesting that the change took place afterward.
On the same day as the meeting, the board elected Jon Gieselman, Apple’s vice president of services marketing, to “fill the vacancy created by Mr. Okerstrom’s resignation from the Board,” according to a filling with the U.S. Securities and Exchange Commission.
Expedia Group includes brands and sites such as Vrbo, Travelocity, Orbitz, HomeAway and many others, in addition to the flagship Expedia.com. In recent months, Expedia has settled disputes with United Airlines and Ryanair, bolstering its position in online travel booking. That comes as the company is staring down Google as a looming giant in the field of travel.
The company’s shares are up more than 7 percent in trading Wednesday morning following the announcement.
Here is the full text of the message sent to Expedia employees this morning from Diller.
Just a few minutes ago, the Company announced that Mark Okerstrom and Alan Pickerill have resigned from their roles at Expedia effective immediately.
Peter Kern, our Vice Chairman, and I, will oversee the company’s executive leadership team, managing day-to-day operations, while the Board determines the long-term leadership of the Company. Eric Hart, our Chief Strategy Officer, will serve as acting CFO.
We are creating an Expedia Business Services organization which will be comprised of Expedia Partner Solutions and Egencia. Ariane Gorin, who most recently served as President of Expedia Partner Solutions, is being promoted and will have an expanded role as President of Business Services. Rob Greyber will report to Ariane, and together they will identify opportunities for our teams to sharpen our focus on EG B2B customers globally in 2020.
Expedia has an exceptionally strong and deep executive leadership team in place, one Peter and I look forward to working closely with in the period ahead, as well as over the long-term.
This is of course an unfortunate and difficult situation. I promise you the decision was taken with great consideration and I also promise you that Peter and I will do all we can to minimize any disruption.
The Board made this change to Expedia’s leadership because we disagreed on strategy with the departing senior executives. As you all know, earlier this year, Expedia embarked on an ambitious reorganization plan with the goal of bringing our brands and technology together in a more efficient way. This reorganization, while sound in concept, resulted in a material loss of focus on our current operations, leading to disappointing third quarter results and a lackluster near-term outlook.
The Board disagreed with that outlook, as well as the departing leadership’s vision for growth, strongly believing the Company can accelerate growth in 2020. That divergence necessitated a change in management.
Saying thank you to departing managers is often pro forma in these situations. In this case, though, it is truly meant. Mark and Alan’s long service to Expedia have greatly benefited the enterprise. They are both fine executives and we sincerely wish them the best for the future.
I am sure there will be plenty of questions about these changes to the organization, and we are happy to provide answers to them. But now is not the time to be distracted. We need to concentrate on the tasks at hand and get back to business. Mine and Peter’s energy will go into bringing more acute focus to our day-to-day operations, building on our iconic brands, and getting Expedia back to the growth we all expect.
The work Mark began, to break down silos and focus on the whole company, is keenly important to our future. We expect all of you, regardless of where you reside in the company or how your role might have recently changed, to look to make the whole better – to simplify processes, to improve collaboration, and to set all of us up for success.
Please join me in congratulating Eric and Ariane and wishing them godspeed in their new roles. They have both proven to be exemplary leaders throughout their tenures at Expedia.
I’ve spent a great deal of time with our leadership team, have great confidence in each of them individually, and have the greatest confidence that collectively we’ll set new goals and strategies that will quickly build back momentum both internally and externally.
We are scheduling a town hall for December 19 in Seattle where Peter and I will talk more with you in person and answer your questions.
This is a sad day for all of us, as we see long-time, respected and trusted colleagues depart. There is no way I can tell you this isn’t a difficult day. But I can tell you that this momentary misstep also represents a new beginning. You are part of a great company, the world’s leading travel platform, that is strong both financially and with its superb work force. It’s not that I’m disinterested in my other businesses, but for the last 18 years I’ve always truly loved being associated with travel and with Expedia and our iconic travel brands. We bring pleasure and purpose to so many lives, and as was once said at the time of our original purchase, “If there’s life, there’s travel.” I’ve bet on that for almost two decades and nothing will deter me from helping make that bet continue to come through.
Please join with me and Peter and all of our colleagues in making for better days ahead.